Correlation Between UET United and Textron
Can any of the company-specific risk be diversified away by investing in both UET United and Textron at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining UET United and Textron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UET United Electronic and Textron, you can compare the effects of market volatilities on UET United and Textron and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in UET United with a short position of Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and Textron.
Diversification Opportunities for UET United and Textron
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between UET and Textron is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron and UET United is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on UET United Electronic are associated (or correlated) with Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of UET United i.e., UET United and Textron go up and down completely randomly.
Pair Corralation between UET United and Textron
Assuming the 90 days trading horizon UET United Electronic is expected to generate 2.39 times more return on investment than Textron. However, UET United is 2.39 times more volatile than Textron. It trades about -0.01 of its potential returns per unit of risk. Textron is currently generating about -0.3 per unit of risk. If you would invest 94.00 in UET United Electronic on October 9, 2024 and sell it today you would lose (1.00) from holding UET United Electronic or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UET United Electronic vs. Textron
Performance |
| Timeline |
| UET United Electronic |
| Textron |
UET United and Textron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UET United and Textron
The main advantage of trading using opposite UET United and Textron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UET United position performs unexpectedly, Textron can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Textron will offset losses from the drop in Textron's long position.| UET United vs. Charter Communications | UET United vs. VIENNA INSURANCE GR | UET United vs. Zurich Insurance Group | UET United vs. Reinsurance Group of |
| Textron vs. International Consolidated Airlines | Textron vs. WIMFARM SA EO | Textron vs. JAPAN AIRLINES | Textron vs. Chongqing Machinery Electric |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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